NEAR Protocol's House of Stake governance body approved proposal HSP-029 on November 2, 2026, lowering the network's maximum annual token issuance from 2.5% to 1.6% over 24 months. The measure passed with 99.97% of participating veNEAR voting in favor, representing 62% of eligible voting power ac...
"I believe that NEAR issuance should eventually cease, and the total supply should become fixed." — Sal Ternullo, CEO, SVRN
NEAR Protocol's House of Stake governance body approved proposal HSP-029 on November 2, 2026, lowering the network's maximum annual token issuance from 2.5% to 1.6% over 24 months. The measure passed with 99.97% of participating veNEAR voting in favor, representing 62% of eligible voting power across 32 accounts. Approximately 3.29 million veNEAR were cast in support.
The cut — NEAR's second in 13 months, following a reduction from 5% to 2.5% in October 2025 — eliminates an estimated 11.8 million NEAR from circulation over two years and 66.1 million over six years. At the November 3 spot price of approximately $3.75, the six-year avoided dilution equates to roughly $248 million. NEAR fell 7–9% in the 24 hours following the vote, trading at $3.75 with futures open interest at $856 million across seven major exchanges.
The governance action arrives as NEAR's Intents cross-chain engine posted $10.4 billion in Q3 2026 transaction volume — up 66.8% quarter-over-quarter — and $52 million in cumulative fees. The proposal's author, SVRN CEO Sal Ternullo, framed the issuance cut as addressing a structural imbalance: the protocol currently mints approximately 89,517 tokens daily, creating persistent sell pressure that disproportionately dilutes the 57.3% of supply that remains unstaked.
HSP-029 implements a per-epoch issuance ramp following a defined formula: cap(t) = 2.5% − 0.9% × min(t, 24)/24, where t represents months elapsed from activation. The ceiling declines approximately 0.0375 percentage points per month, translating to roughly 3.75 basis points.
Daily token minting falls from approximately 89,517 NEAR to approximately 57,291 NEAR at the target rate. The existing 90/10 split between staking rewards and protocol treasury remains unchanged.
Implementation requires three sequential gates: Security Council ratification (subject to a 14-day veto window), a 90-day grace period for wallets, exchanges, and staking providers to update disclosures, and validator adoption of the protocol upgrade at a 68.41% approval threshold — a process independent of governance participation. If no veto occurs, the earliest activation falls in approximately Q1 2027, with the 1.6% target reached by roughly Q1 2029.
The proposal's core argument is mechanical, not speculative. NEAR's current 2.5% issuance rate distributes 90% of newly minted tokens to stakers and 10% to the protocol treasury. With a staking ratio of approximately 45.9% (roughly 601 million of 1.31 billion total supply staked to active validators as of October 2026), the remaining 57.3% of circulating supply absorbs dilution without compensation.
Ternullo's analysis projects the ramp avoids approximately 11.8 million NEAR of issuance over the first two years and 66.1 million over six years, leaving the supply approximately 4.36% smaller than under the existing ceiling. The proposal estimates this eliminates $8–17 million in annual tax-related value leakage — wealth transferred outside the NEAR ecosystem through staking reward taxation events.
For a holder staking 1,000 NEAR, the net effect is approximately 20 fewer tokens received by Year 2. The breakeven requires NEAR appreciation of approximately 1.83%, or roughly $0.07 per token from the pre-vote $4.30 price. Non-staking holders — the majority of the supply base — receive immediate benefit with no offset.
The most direct impact falls on stakers. Gross staking yield drops from 5.27% to an estimated 3.37% at full implementation — a 36% compression.
| Metric | Pre-HSP-029 | Post-HSP-029 (Month 24) | |---|---|---| | Maximum annual issuance | 2.5% | 1.6% | | Gross staking yield | 5.27% | 3.37% | | Daily token issuance | ~89,517 NEAR | ~57,291 NEAR | | Staker allocation (90%) | ~80,565 NEAR/day | ~51,562 NEAR/day | | Treasury allocation (10%) | ~8,952 NEAR/day | ~5,729 NEAR/day |
The yield compression is significant in the context of competing proof-of-stake networks. Ethereum's staking yield currently sits near 3.0–3.5%, while Cosmos chains range from 7–15%. Solana, following its own SIMD-0550 issuance reform ratified in August 2026, targets a terminal yield of approximately 2.25%.
HSP-029's analysis identifies 24 of 405 active validator pools that may lose economic self-sufficiency under the 1.6% rate at current spot prices. However, the proposal argues this figure overstates the practical impact.
The median validator in the entry cohort (30,000–60,000 delegated stake) manages 40,130 NEAR in delegated capital against only 19 NEAR in personal capital — a self-stake ratio of 0.05%. Ternullo's argument: "No issuance rate at or below 2.5% sustains 300 self-sufficient validators at any price tested, including a doubled token. The long tail runs on delegation, not issuance against their own stake."
The validator set proved resilient through the October 2025 cut from 5% to 2.5%. Community member vinibarbosa, supporting the proposal in the governance forum, noted that validator growth continued despite the prior, sharper revenue reduction.
One counterpoint raised by community member arpoas proposed an alternative: minimum 5% validator commissions, algorithmic revenue staking to support small validators, and a phased transition toward a fixed supply funded by protocol revenue rather than emissions.
The NEAR issuance cut invites direct comparison with Solana's SGP-0002/SIMD-0550, ratified in August 2026. Both networks are compressing validator rewards as fee revenue grows.
| Metric | NEAR (HSP-029) | Solana (SIMD-0550) | |---|---|---| | Yield compression | 36.0% | 61.5% | | Target yield | 3.07% | 2.25% | | Six-year supply reduction | 4.36% | 2.60% | | Validator attrition risk | 24/405 (5.9%) | 30/738 (4.1%) | | Implementation period | 24 months | 18 months |
NEAR's approach is less aggressive than Solana's on yield compression but removes a larger share of total supply. The proposal explicitly references Solana's experience, noting that simple parameter-change governance proposals have historically succeeded while complex fee-restructuring mechanisms have failed.
Cosmos's Prop 848, which halved maximum inflation, passed with 72.7% turnout — another precedent the proposal cites. The pattern across networks: stakeholders accept lower yields when the dilution arithmetic is made explicit.
The issuance debate does not occur in a vacuum. NEAR's Intents cross-chain engine processed $10.41 billion in Q3 2026 volume, up from $6.24 billion in Q2 — a 66.8% quarterly increase and 891% year-over-year growth. Monthly volume rose from $2.40 billion in July to $4.80 billion in September.
Intents generated $52 million in cumulative fees during Q3, with $8 million allocated to NEAR token buybacks. On a 30-day rolling basis, buybacks totaled approximately $1.9 million against approximately $13 million in new issuance — a ratio Ternullo characterized on the Bankless podcast as "still real" but structurally insufficient.
The Intents engine also drove a 463% quarter-over-quarter increase in Confidential Intents TVL, reaching $160 million. Total network transactions averaged 739,000 per day across Q3, with 68 million total quarterly transactions.
The buyback-versus-issuance ratio underscores the proposal's logic: at current fee levels, protocol revenue covers roughly 15% of new issuance. Cutting issuance by 36% narrows — but does not close — that gap.
NEAR traded at approximately $3.75 on November 3, down 8.75% in 24 hours and over 14% on the week. The token broke below the $4.30 support level that had held through October. Futures open interest stood at $856 million across seven major exchanges.
The sell-off occurred against a broader market backdrop: Bitcoin fell 2% and the aggregate crypto market cap slipped 0.5% to $2.67 trillion, with the Fear and Greed Index at 26. However, NEAR underperformed other large- and mid-cap altcoins, suggesting the issuance reform contributed to the selling pressure — a common pattern where yield-compression announcements trigger delegator repositioning before implementation begins.
Three risks warrant monitoring:
Validator upgrade adoption. The protocol change requires 68.41% of validators to upgrade — independent of the House of Stake vote. If adoption stalls below threshold, the issuance cut cannot activate regardless of governance approval.
Staking ratio migration. If stakers exit in response to lower yields, the remaining stakers receive proportionally higher rewards, partially offsetting the cut. However, a declining staking ratio reduces network security. The October 2025 cut did not trigger meaningful unstaking; whether a second consecutive cut produces a different outcome is uncertain.
Security Council veto. The Security Council retains a 14-day veto window. No public indication suggests a veto is likely, but the mechanism exists.
Quarterly transparency reports on actual versus planned issuance are mandated by the proposal. This monitoring requirement provides a structured feedback loop absent from most issuance reforms on other networks.
HSP-029 continues a pattern visible across major proof-of-stake networks: as on-chain fee revenue grows — however slowly — governance bodies vote to compress emissions. The economic logic is straightforward: issuance that exceeds fee-funded sustainability transfers value from passive holders to active stakers while creating persistent sell pressure.
NEAR's approach is measured relative to peers. The 24-month ramp, 90-day grace period, and quarterly reporting requirements reflect lessons from Solana's and Cosmos's governance processes. The 36% yield compression is significant but not as aggressive as Solana's 61.5% cut.
The open question is whether protocol revenue can grow fast enough to replace issuance-funded security. At $52 million in quarterly Intents fees and $8 million in buybacks, NEAR's fee engine is demonstrably real but remains a fraction of what issuance provides. The next two years will determine whether the Intents volume trajectory — up 891% year-over-year — closes the gap or whether further issuance cuts are premature.
For now, the vote establishes that NEAR's stakeholders prefer less dilution to higher yield. The market, in the short term, disagrees.